Grainger reports drop in Canadian segment second quarter earnings
Chicago – Grainger reported results for the 2017 second quarter ended June 30, 2017. Sales of $2.6 billion increased 2 percent versus $2.6 billion in the second quarter of 2016. There were 64 selling days in the 2017 second quarter, the same as the 2016 second quarter. Net earnings for the quarter of $98 million were down 43 per cent versus $173 million in 2016. Earnings per share of $1.67 declined 40 per cent versus $2.79 in 2016.
“The second quarter was in line with our expectations, as we saw continued volume growth from our strategic pricing initiatives in the United States. We remain on schedule to roll out web prices on our entire assortment on Aug. 1,” said Chief Executive Officer DG Macpherson. “Outside the United States, we took aggressive action to streamline our portfolio and focus on profitable businesses, as we announced the wind-down of the business in Colombia and previously announced the closing of 59 branches in Canada this year. Based on our confidence from what we are seeing, we are reiterating our guidance for the year,” Macpherson concluded.
The company reiterated its 2017 sales and earnings per share guidance of sales growth of 1 to 4 percent and adjusted earnings per share of $10.00 to $11.30. The company’s previous 2017 guidance was communicated on April 18, 2017.
Second quarter 2017 sales for the Canada segment decreased 3 per cent in U.S. dollars and increased 2 per cent in local currency. The two per cent increase consisted of two percentage points from volume and a two percentage point benefit from the favourable comparison related to the Alberta wildfires in 2016, partially offset by one percentage point from lower price and a one percentage point decline from the timing of the Easter holiday.
The business in Canada posted a $28 million operating loss in the 2017 second quarter versus a $28 million operating loss in the prior year. Current year performance was primarily driven by improved gross margin offset by lower sales and restructuring charges. The gross profit margin in Canada increased 4.1 percentage points versus the prior year largely due to a favourable comparison related to an inventory reserve adjustment in the prior year. Operating expenses increased 8 percent. The 2017 second quarter contained $20 million of restructuring charges related to facility and headcount reductions.
Ron Jadin, Senior Vice President and Chief Financial Officer announced today that he will be retiring at year-end. Jadin joined Grainger in 1998 and has served in various financial roles including as CFO since 2008. The company and the Board of Directors thank Jadin for his many contributions during his tenure. An external search has been launched to identify his successor.